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Is ASEAN on the cusp of fulfilling its long-held promise? 

The time has come for ASEAN to capitalize on its assets, size, growing wealth and burgeoning global clout.

The time has come for ASEAN to capitalize on its assets, size, growing wealth and burgeoning global clout. Image: Victor: Unsplash

Joo-Ok Lee
Head, Regional Agenda, Asia-Pacific; Member of the Executive Committee, World Economic Forum
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  • Economically, ASEAN is one of the few bright spots as the global economy continues to stall.
  • The region is poised to lead the next era of digital participation, with a focus on e-commerce retail and online labour.
  • ASEAN is known for its neutrality, giving it a strong position from which to act as mediator on the global stage.

In the more than half century since its founding, ASEAN has historically been a relatively ‘quiet’ trading bloc. Signs suggest, however, that this is changing. Rarely was there a month during 2022 when ASEAN wasn’t in the news, and it was a year in which it hosted not one but three global leadership summits – the ASEAN/East Asia Summit in Phnom Penh, the G20 Summit in Bali and APEC Economic Leaders Meeting in Bangkok.

For ASEAN watchers, this wasn’t a surprise; many suggest the time has come for the bloc to capitalize on its assets, size, growing wealth and burgeoning global clout.

Growth – leveraging existing and new advantages

Economically, ASEAN is one of the few bright spots as the global economy continues to stall. Its economies enjoyed strong growth during 2022 on the back of a post-COVID-19 surge in activity, and although this is slowing and the global chill will have some effect, overall growth forecasts for 2023 are pegged at 4.4% for the ASEAN-6 (Indonesia, Malaysia, the Philippines, Singapore, Thailand and Viet Nam).

Collectively, ASEAN is a huge bloc in terms of physical landmass, natural resources and population size (approximately 680 million). Its young population is increasingly educated and affluent, and with an entrepreneurial mindset and growing resources to invest in business, they are creating a strong regional market, which is helping to offset the dampening effects of the global slowdown. Tourism is another boon, and as international travel recovers during 2023, the region – and particularly its perennially popular destinations like Thailand – should enjoy continued growth in arrivals.

As a trading bloc ASEAN is one of the fastest growing (accounting for approximately 8% of global exports), and through years of making trading deals, now sits at the heart of two major free trade areas (FTAs) – the Regional Comprehensive Economic Partnership (RCEP), which includes Australia, China, Japan, New Zealand and South Korea, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which includes Latin American countries like Chile and Mexico, as well as Canada and several other Asian nations.

Sustainability – from laggard to leader

One of the greatest challenges facing the region is climate change. For Indonesia and the Philippines, with their large archipelagos and many island dwellers, the prospect of rising sea levels is devastating. Already several of ASEAN’s members states are suffering other climate-related changes, typically in the form of unseasonably heavy rains causing flooding, and this situation can only deteriorate.

One of the worst affected is Indonesia and its decision to take on the leadership of the Ocean 20 initiative underlines the rising level of engagement – and voice – that ASEAN countries want to have in the sustainability debate. In 2021, the bloc launched its first State of Climate Change Report, which not only charts the changing outlook, but is designed to find ways in which the 10 members can collaborate to meet climate targets.

How to tackle its growing greenhouse gas emissions remains a central issue, but positively, nine member states have committed to net zero and the bloc has pledged to make 23% of its primary energy renewable by 2025, with global solar powerhouse, Viet Nam leading the way in this respect.

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Digital economy – poised to become a global leader

ASEAN is poised to lead the next era of digital participation. The digital transformation throughout the region has been swift, with COVID-19 providing an unforeseen boost. As the ASEAN Digital Generation Report into digital transformation and recovery highlights, it prompted not just a huge uptake in digital technology – 60 million people in the region became online consumers during the pandemic – but also a digital boom that has shaped almost every aspect of life, including doing business.

As a result, several ASEAN countries lead globally in some sectors of digitalization, including e-commerce retail growth. The Philippines and Malaysia are the two top countries in this respect, registering growth of 25% and 23% respectively per year, while the Philippines is also continuing to serve as a steady source of online labour to the rest of the world.

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Mediation – the shift from silent partner

ASEAN is known for its neutrality. Although tensions erupt sporadically within the bloc, it has long maintained a non-critical stance externally – and often internally too – reflecting its identity: ‘Unity in Diversity’. For the most part, ASEAN’s neutral stance has worked to its advantage, allowing it to work with a range of countries who display, at times, quite opposite political and security outlooks.

Signs emerged during 2022 that ASEAN might try to capitalize on its neutrality and offer its services as mediator. Indonesia enjoyed success in reaching consensus at the G20 in November in the form of the Leaders’ Declaration. Similarly. Cambodia as ASEAN’s chair brought Ukraine closer to the region the same month through the Treaty on Amity and Cooperation in Southeast Asia (TAC), a notable feat given ASEAN’s long-standing relations with Russia.

These successes mark a foray into mediation for the bloc, and potentially lay the groundwork for further such activity. This, coupled with ASEAN’s other strengths look set to ensure that during 2023, the bloc’s influence on the world stage will continue to quietly develop.

This article originally appeared on The Straits Times.

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